The present invention relates generally contract management systems that organize and analyze the terms and conditions of contractual agreements.
Written contracts are commonly used to document agreements that have been negotiated between two or more business or other persons or entities. These contracts are critical as they define the obligations between the parties to the contract, such as the terms of payment, warranties and indemnities, product or service to be delivered, and many other conditions relevant to the parties to the contract. Contracts tend to be prepared individually for each agreement, but often have similar terms and conditions. Large corporations and governments have standard clauses for certain terms and conditions that are to be included in the contracts they execute. See e.g., U.S. Government Federal Acquisition Rules (FAR).
Large corporations and governments may have dedicated staff for preparing and reviewing contracts. The staff may collect information from persons in the corporation and government negotiating the contract, and from persons who will be responsible for the performance of the contract. The amount of information needed by the staff for each contract may depend on the risk, e.g., dollar value, that the proposed contract presents to the corporation. The amount of information needed from a contract depends, at least in part, on the extent the terms and conditions of the contract vary from standard terms and conditions. For contracts having standard terms and conditions, the company may already have much of the information needed to determine the risk of the contract. Standard terms and conditions have been previously analyzed for potential risks. Those known risks are assigned to contracts having a standard term and condition.
However, contracts having terms and conditions that deviate from standards require a reassessment of the associated risk. To reassess the risk, addition information may need to be collected regarding the non-standard term or condition of the contract. There is a long-felt need for an organized and reliable contracting tool to collect information about contract, for purposes such as risk analysis. This need is especially strong with respect to collecting information regarding non-standard contract clauses.
There is a tendency for contracting staff to collect a great amount of information for each and every contract, including from those smaller contract where only standard contract terms are most often used, and only a minimal amount of information is needed and the risk posed to the company by the contract is small. This over-collection of information is wasteful and delays contract completion. However, there is a danger of not collecting sufficient information because the staff may underestimate the risk of a potential contract if it fails to have information regarding non-standard contract clauses. If insufficient information is collected, the persons reviewing and approving the contract may be doing so without all of the information needed to properly consider the proposed contract.
Once a contract has been prepared by a corporation or other organization, the contract may need to be reviewed by various persons who are to approve the contract or, after the contract is executed, who need to know the obligations and performance requirements stated in the contract. In the past, contracts may have been stored in a file cabinet or in an electronic storage location. However, the contract may not have been stored in a readily accessible file cabinet or electronic file such that all persons having a need to review the contract could quickly obtain the contract for review. Further, the terms and conditions of the contract may not have been stored such that they can be readily obtained and compared to familiar terms and conditions of the other contracts. Accordingly, there is a long felt need for computerized contract automation systems that assist in the preparation, review and storage of contracts, especially with respect to selected terms and conditions of contracts.